USD/CAD – Canadian Dollar Steady, Markets Eye US Retail Sales and Consumer Confidence

The Canadian dollar has posted slight losses in the Friday session. Currently, USD/CAD is trading at 1.3130. On the release front, there are no Canadian events on the calendar. It’s a busy day in the US, with the release of retail sales, inflation, and consumer confidence indicators. Traders should be prepared for some volatility in the North American session.

As a commodity-sensitive currency, the Canadian dollar is sensitive to fluctuations in oil prices. With crude prices climbing above the $50 level, the Canadian dollar has followed suit and moved higher as well. The currency is up 2.2 percent in January, and on Thursday, USD/CAD dipped to 1.3042, its lowest level since October 19. If the rally continues, we could see the pair drop below the symbolic 1.30 next week.

As we begin 2017, the US employment picture is bright. On Thursday, unemployment claims beat expectations for a second straight week. However, it should be noted that unemployment rolls may be skewed around the Christmas holiday season, so analysts are not reading too much into these unusually low releases. Still, 4-week averages for unemployment claims remain at very low levels, as the employment markets remains close to capacity as a strong US economy has led to demand for more workers. If the US economy continues to heat up, the Fed will likely step in and hike rates. On Thursday, FOMC member Patrick Harker took note of the strong US economy and projected three “modest” rates from the Fed in 2017.

There was an air of anticipation ahead of Donald Trump’s press conference on Wednesday, but the event quickly turned into a spectacle rather than a platform outlying the president-elect’s plans as president. The markets were hoping to hear some specifics about Trump’s economic policy, but the president-elect didn’t outline any plans regarding the economy. Instead, Trump focused on attacking the media for releasing damaging material on him, and also presented his plan to avoid business conflicts while in office. The markets were clearly disappointed and the Canadian dollar took advantage, posting gains against the dollar.

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USD/CAD Fundamentals

Friday (January 13)

• 8:30 US Core Retail Sales. Estimate 0.5%
• 8:30 US PPI. Estimate 0.1%
• 8:30 US Retail Sales. Estimate 0.5%
• 8:30 US Core PPI. Estimate 0.3%
• 19:30 US FOMC Member Patrick Harker Speech
• 10:00 US Preliminary UoM Consumer Sentiment. Estimate 98.6
• 10:00 US Business Inventories. Estimate 0.3%
• 10:00 US Preliminary UoM Inflation Expectations

*All release times are GMT

*Key events are in bold

USD/CAD for Friday, January 13, 2017

USD/CAD January 13 at 7:00 EST

Open: 1.3151 High: 1.3168 Low: 1.3127 Close: 1.3136

USD/CAD Technical

• USD/CAD was flat in the Asian session and has posted small gains in European session
• 1.3120 is providing weak support
• 1.3253 is the next resistance line

Further levels in both directions:

• Below: 1.3120, 1.3003, 1.2922 and 1.2815
• Above: 1.3253, 1.3371 and 1.3457
• Current range: 1.3120 to 1.3253

OANDA’s Open Positions Ratio

USD/CAD ratio is showing gains in short positions. Currently, long positions have a majority (61%), indicative of trader bias towards USD/CAD reversing directions and moving higher.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.